To May’s Tax Tips & News, our newsletter designed to bring you tax tips and news to keep you one step ahead of the taxman.
If you need further assistance just let us know or you can send us a question for our Question and Answer Section.
We are committed to ensuring none of our clients pay a penny more in tax than is necessary and they receive useful tax and business advice and support throughout the year.
Please contact us for advice in your own specific circumstances. We’re here to help!
New credit card payment fees take effect
Clients may be interested to know that HMRC have introduced a new schedule of fees, which apply from 1 April 2016, and replace the former 1.5% fee. The new rates vary depending on the type of card used and whether the card is a personal or corporate card. – read more >>
HMRC on house due diligence
Further to the Budget 2016 announcement, HMRC have published a consultation document covering proposals to introduce a fulfilment house due diligence scheme whereby fulfilment houses in the UK will be required to register, maintain accurate records and be able to evidence the due diligence they have undertaken to ensure their overseas client is a bona fide supplier.
The scheme may directly affect all UK-based businesses that fulfil orders of imported goods. Some rules may also apply to businesses that import goods or those that transport imported goods to and from fulfilment houses.
The consultation will run until 30 June 2016. The intention is to introduce this measure in 2018.
New student loan plans take effect
Repayment of student loans is a shared responsibility between the Student Loans Company (SLC) and HMRC. Employers have an obligation to deduct student loan repayments in certain circumstances and to account for such payments ‘in like manner as income tax payable under the Taxes Acts’ (Education (Student Loans) (Repayment) Regulations 2000, SI 2000/944, reg 14). – read more >>
Companies to be liable for employees who facilitate tax cheating
The Government has recently announced that it is to bring forward plans to introduce a criminal offence for corporations who fail to stop their staff facilitating tax evasion.
At the time of the March 2015 Budget, the Chancellor confirmed that the government would be delivering on its pledge to introduce the measure in this Parliament. Prime Minister David Cameron has now confirmed that the offence will be introduced in legislation brought forward this year.
The government has already confirmed plans to create a cross-agency taskforce to investigate all evidence of illegality that has emerged from the so-called ‘Panama Papers’.
Further information on this announcement can be found here.
ATT urges HMRC to amend flat rate VAT scheme
Do you think you are paying too much VAT? Are you concerned that your business is being unfairly penalised by a VAT policy which treats all businesses the same regardless of size? Well, that’s a criticism we, as accountants, often hear. Small businesses have been asking for a fundamental reform of the current system for some time, and it now appears their cause has been championed by the Association of Tax Technicians, with the ATT urging HM Revenues & Customs to review its VAT flat rate scheme to guarantee that small business consultants are no longer charged too much VAT. – read more >>
May Key Tax Dates
2 – Last day for car change notifications in the quarter to 5 April – Use P46 Car
19/22 – PAYE/NIC, student loan and CIS deductions due for month to 5/5/2016
31 – Deadline for copies of P60 to be issued to employees for 2015/16
May Questions and Answers
Q1. How do I work out my share of a capital gain?
I owned a quarter share in a property that was sold in 2015. It was not my main residence at any time during my period of ownership. I am trying to work out my share of the capital gain arising on the property. Do I simply divide the purchase price, sale price, and any improvement costs by four to work out how much tax I will have to pay?
A: Assuming that all the improvement costs and the sale proceeds relating to this property were 25% your responsibility, then yes, you just show the figures relating to your share of the gain on your tax return. However, it may be worth providing HMRC with clarification in the ‘additional information’ section of the return.
Q2. Are my savings covered by the personal savings allowance?
I have several savings accounts. Most of the accounts have always had tax deducted from the interest paid before I receive it. However, I understand that one of my accounts is ‘tax-free’. Interest has always been paid gross and I have never included it on my tax return. I am a basic rate taxpayer. Is the ‘tax-free’ account interest included in the personal savings allowance limit?
A: From 6 April 2016, banks and building societies will pay interest on all savings accounts gross. In parallel with this change, the new personal savings allowance (PSA), also introduced from 6 April 2016, means every basic-rate taxpayer can earn £1,000 interest without paying tax on it (higher rate taxpayers have a PSA of £500), currently equivalent to the interest on almost £75,000 in some easy-access savings account.
Interest that is already tax-free isn’t included – so this includes ISA interest and Premium Bond ‘winnings’. Interest from these will still be paid tax-free, but it just won’t count toward your PSA limit. So, if you get £500 in ISA interest, and you’re a basic-rate taxpayer, you’ll still have £1,000 of PSA to cover other interest.
Q3. Will I be entitled to tax-free childcare?
I have heard that HMRC are launching a new tax-free childcare scheme. I am currently employed and earn £70,000 a year. My employer does not provide any support for childcare. Will I be eligible to join the new scheme?
A: HMRC have confirmed that a new tax-free childcare scheme will be launched from early 2017. To qualify, parents will have to be in work, and each earning around £115 a week and not more than £100,000 each per year.
Tax-Free Childcare does not rely on employers offering the scheme, unlike the current scheme (‘employer-supported childcare’). Any working family will be able to use the new scheme, provided they meet the eligibility requirements.
Once launched, you will be able to open an online account, which you can pay into to cover the cost of childcare with a registered provider. This will be done through the government website, GOV.UK.
For every 80p you or someone else pays in, the government will top up an extra 20p. This is the equivalent to the current basic rate of income tax – hence the ‘tax-free childcare’ name given to the new scheme. The government will top up the account with 20% of childcare costs up to a total of £10,000 – the equivalent of up to £2,000 support per child per year (or £4,000 for disabled children). The scheme will be available for children up to the age of 12.